Decoding Real Property Titles: Which One Is Right for You?
Understanding how to hold a title to real property is crucial, whether you’re a first-time homebuyer or a seasoned investor. Your choice in this matter can have far-reaching implications, from how property rights are transferred to your heirs to how your estate is divided upon your death. In this guide, let Neighborhood Escrow demystify the different ways of holding title for you.
Sole Ownership: Going Solo with Your Property
When one person or entity takes full control and responsibility for a property, it’s termed as sole ownership. The following are examples of sole ownership:
- A Single Individual: This applies to someone who has never been married or registered as a domestic partner.
- An Unmarried Man or Woman: This category is for those who once were married but are now legally divorced.
- Married Individual Holding as Sole and Separate Property: Sometimes, a married man or woman or a registered domestic partner may choose to hold the title without including their spouse or partner. However, for this, title insurance companies might require the excluded party to legally give up any claims to the property.
Co-Ownership: Sharing Property Rights
When two or more individuals or entities jointly own a property, it’s termed as co-ownership. Here’s a deeper look at the variants of co-ownership:
- Community Property: Exclusive to legally married couples, both partners have equal rights to the property.
- Community Property with Rights of Survivorship: This integrates the benefits of community property with joint tenancy. If one partner dies, the other automatically inherits their share.
- Joint Tenancy: This allows two or more individuals (except corporations, partnerships, LLCs, or trust trustees) to own property equally. All joint tenants must acquire the property simultaneously and have identical interests. Upon the death of a joint tenant, the surviving tenant(s) retain ownership.
- Tenancy in Common: This is a more flexible form of co-ownership. Multiple individuals or entities own the property, and their individual stakes may vary. Every tenant has the freedom to deal with their share as they deem fit.
Other Forms of Ownership: Beyond Individuals
While the majority of property titles are held by individuals, some entities established by state laws can also own property. These include:
- Corporation: This is an entity recognized by the state, separate from its shareholders. It’s like a distinct “individual” that can own, sell, or buy property.
- Partnership: A partnership comprises two or more people or entities jointly running a business for profit. This entity can also hold property titles.
- Limited Liability Companies (LLCs): Similar to partnerships, LLCs are also recognized by state laws and can have multiple co-owners for profit-driven activities.
- Trust: A trust isn’t exactly an owner but acts on behalf of the actual owners or beneficiaries. The trustee holds the legal title to the property and manages it as per the trust’s terms.
Making an informed choice regarding your property’s title is paramount. It determines your rights, how you can transfer those rights, and how they might be divided should unforeseen circumstances arise. Reach out to us at 310-378-2456 to discuss your needs further.
